Subscriptions to professional journals$215
Taking potential clients to lunch $400
a. Identify which of these expenses are deductible and the amount that is deductible. Indicate whether they are deductible for or from AGI.
Travel to client locations would be from AGI and would be $750 Subscriptions to professional journals would be from AGI and would be $215 Taking potential clients to lunch would be from AGI for $400 Photocopying would be from AGI for $60
b. Would the answers to Part a change if the accounting firm reimburses Roberta for these expenses?
Yes: no deductions would be allowed
c. Assume all of the same facts as in Part a, except that Roberta is self-employed. Identify which of the expenses are deductible, and indicate whether they are deductions for or from AGI.
Travel to client locations would be for AGI and would be $750 Subscriptions to professional journals would be for AGI and would be $215 Taking potential clients to lunch would be for AGI but only for $200 because meals are only 50% deduction Photocopying would be for AGI for $60
I:6-35 Capitalization vs. Expense. Rentals R Us incurs the following expenditures on an apartment building it owns:
Replace the roof $25,000
Repaint the exterior 7,000
Install new locks 1,500
Replace broken windows 1,200
Replace crumbling sidewalks and stairs 7,000
Discuss the proper tax treatment for these expenditures.
Replacing the roof would be capitalized because it adds value. Repainting the exterior would be an expense deduction because it is maintenance. Installing new locks would also be an expense deduction for maintenance. Replacing broken windows also falls under the expense for maintenance category so it also is an expense deduction. Replacing the crumbling sidewalks...